Monte Carlo Stock Simulator
A single DCF gives you false precision. This simulator runs thousands of discounted-cash-flow scenarios with growth and the exit multiple drawn at random, so you get a probability range for fair value instead of one fragile number.
Worked example
Start from a base case of $6 EPS, 10% growth and an 18× exit multiple. Add uncertainty — growth of ±3 percentage points and a ±4 turn multiple — and run 5,000 simulations. You might get a median (P50) fair value near $108, a pessimistic P10 around $78 and an optimistic P90 near $150. That spread tells you far more than a point estimate: if the price sits above your P90, the stock is expensive under almost every scenario.
Why simulate instead of using one number?
The two inputs that move a DCF the most — growth and the exit multiple — are exactly the ones you cannot know precisely. A Monte Carlo simulation embraces that: it samples each from a distribution around your best guess and re-runs the model thousands of times. The result is a histogram of fair values and percentiles (P10 / P50 / P90) that describe the range of plausible outcomes and how confident you can reasonably be.
How to set the uncertainty
Widen the standard deviations for businesses whose future is genuinely hard to predict (early-stage, cyclical, single-product) and tighten them for stable compounders. Then compare today's price to the distribution: below P10 looks cheap across scenarios, above P90 looks expensive across scenarios, and in between is a genuine judgement call.
Frequently asked questions
- What is a Monte Carlo simulation in investing?
- It is a technique that runs a model many times with randomly sampled inputs to produce a distribution of outcomes, rather than a single deterministic answer.
- How many simulations does this run?
- 5,000 runs per calculation, entirely in your browser. That is enough for stable percentiles while staying instant. Hit Re-run to draw a fresh set.
- What do P10, P50 and P90 mean?
- They are percentiles of the simulated fair values: roughly 10% of runs fall below P10, half fall below P50 (the median), and 90% fall below P90. Together they frame the likely range.
- Does this predict the share price?
- No. It models a range of intrinsic values from your assumptions. The market price can differ for a long time; the range helps you judge margin of safety.
Run Monte Carlo on your real holdings
TrimmTrack applies this simulation to every position you own, using live fundamentals so the base case updates itself.